Who owns your great idea?
This article was initially published in the May 2016 edition of Chamberlink
You know that the billings system could be improved…the amount of time from order to despatch could be cut in half…or if you could only tweak that widget the whatnot would use less energy…then…Wham! That eureka moment. You excitedly explain your idea to your boss. They love it. It’s adopted by the company and you realise that your invention has made a significant financial impact, plus it has potential to be commercialised. Only one problem – who owns your great idea – and ultimately, who is going to make money from it?
Before buying the luxury sports car, read what Lucy Trueman, patent attorney partner at specialist Intellectual Property advisor Barker Brettell has to say about the situation.
Inventor or owner?
‘Inventing’ and ‘owning’ a great idea are quite different. Understanding the difference is critically important in determining who owns an invention which, in turn, will determine a) who can apply for IP rights and b) if commercialised, who can make money from an invention or creative works.
‘Inventorship’ identifies the creator or creators of an invention. ‘Ownership’ on the other hand, identifies the rightful owner or owners of an invention – who has the right to restrict third party activities in relation to that invention.
While they can be one and the same, often the inventor and owner are different people or businesses, which unless it is very clear, is where misunderstandings and disputes can arise.
Being creative: is it your job?
If you are not employed, the rules are simple – you will be the first owner of any invention or other creative work that you come up with.
However, if you are an employee resident in the UK and create an invention, the UK Patent Act 1977 states that the first owner of your invention will be your employer, assuming the invention was made during the course of your normal duties, or during the course of duties specifically assigned to you. This only applies, however, if the duties were such that an invention might reasonably be an expected result. This Act overrides contract law including clauses in an individual employment contract.
Furthermore, if you hold a senior position in a company, i.e. director of a company, the UK Patents Act considers that you have a special obligation to further the interests of your employer. In such cases any invention made in the course of your duties will belong to your employer as the first owner of the invention.
It’s a similar story for designs – if you create a design that is suitable for protection through a UK registered design, the Intellectual Property Act 2014 states that the first owner of the design will be your employer – again, as long as the design is created in the course of your normal duties as an employee as set out in your employment contract.
The same applies to abstract creative works such as literary, theatrical, musical or artistic works, which are often protected by copyright (an IP right that arises automatically when an appropriate work is created). If you create a copyright work such as a brochure, website, photographs or drawings in the course of your normal employment, your employer will be the first owner of your work.
Exceptions to the rule
However there are exceptions. For example, if you come up with an invention or creative work whilst employed, but the invention or creative work was not made in the course of your normal duties, then, under UK law, you are the first owner.
However, how do you define ‘outside the course of the employees’ normal duties’? Sometimes, this can be clear cut – for example, if you work for a catering company and come up with an invention that improves the steering in a car, the invention is obviously outside your normal duties and therefore you will be the first owner. Yet what if you create a new form of packaging? This could be connected with your job if it could be used in food packaging, and so discussions with your employer may be required to determine first ownership. Unfortunately, these can turn nasty, especially if the invention is a good one with the potential to earn you lots of money!
In this sort of situation, it is best to try and address the issues early on with the help of experts rather than stick your head in the sand and hope no questions get asked later on. It is much easier to sort out potential issues before things have progressed too far – and the invention is a successful commercial product that everyone suddenly wants a share of…
Owning your idea
As IP law overrides specific clauses in contracts, inventors or authors cannot prevent inventions or other creative work being first owned by their employer if it’s created in the course of normal duties. Employers may in some cases be willing to consider assigning the rights of an invention back to the inventor, but this would have to make business sense to the employer. As an example, an employee may wish to have a clause in their employment contract stating that if they come up with an invention or other creative work in the course of their normal duties, although it is owned by their employer, there is the option for this to be assigned to the employee if it is not of interest to the company.
Working under commission or as a freelancer gives inventors and authors the opportunity to keep inventions and other creative works as their own property. Many individuals work under commission for one or more companies. In such cases you are not an employee so the first ownership of the invention or creative work that you do for this commissioning company does not automatically pass to the company: you are the first owner. A specific contract is required to transfer ownership of a commissioned work from the inventor or author to the commissioning company. Alternatively, the contract can licence the commissioning company to use the work in return for a royalty. Of course to be commissioned in the first place, the outcome must be something that the commissioning party is happy with. As contracts are legally binding to all parties, it is always best practice to seek advice in drafting – and before signing – any contract presented to you to be sure that all outcomes are understood and covered.
Protecting your idea
As ownership when dealing with employee inventions and other creative works is determined by an understanding of ‘normal duties’, these should be recorded accurately in a document that both parties have agreed to as being accurate, for example, in an employment contract or job description. Any changes to those normal duties should be recorded in the same way. This is important in the safeguarding of both employees and employers ownership rights, ensuring it is clear to both parties and therefore helping avoid disputes later on which can be costly.
In general, IP can only be granted to the inventor or author, or to the party who claims ownership from the inventor. Therefore the chain of title from the inventor through to the applicant for any IP rights needs to be very clear. Despite the position set out by UK law, it is best practice for employers to have employees sign a document specifically assigning their rights in an invention or other creative work to the employer, again so that all parties are clear who owns the invention or creative work.
